0001104659-07-022120.txt : 20070326 0001104659-07-022120.hdr.sgml : 20070326 20070323215040 ACCESSION NUMBER: 0001104659-07-022120 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20070326 DATE AS OF CHANGE: 20070323 GROUP MEMBERS: MTS HEALTH INVESTORS II GP HOLDINGS, LLC GROUP MEMBERS: MTS HEALTH INVESTORS II GP, LLC GROUP MEMBERS: MTS HEALTH INVESTORS II, L.P. GROUP MEMBERS: OAKTREE CAPITAL MANAGEMENT, LLC GROUP MEMBERS: OCM PRINCIPAL OPPORTUNITIES FUND IV GP LTD. GROUP MEMBERS: OCM PRINCIPAL OPPORTUNITIES FUND IV GP, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE IMAGING INC /DE/ CENTRAL INDEX KEY: 0000817135 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 330239910 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-39485 FILM NUMBER: 07716535 BUSINESS ADDRESS: STREET 1: 1065 N PACIFICENTER DR STREET 2: STE 200 CITY: ANAHEIM STATE: CA ZIP: 92806-2131 BUSINESS PHONE: 7146887100 MAIL ADDRESS: STREET 1: 1065 N PACIFICENTER DR STREET 2: STE 200 CITY: ANAHEIM STATE: CA ZIP: 92806-2131 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: OCM Principal Opportunities Fund IV, LP CENTRAL INDEX KEY: 0001394231 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 333 SOUTH GRAND AVENUE STREET 2: 28TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 213-830-2100 MAIL ADDRESS: STREET 1: 333 SOUTH GRAND AVENUE STREET 2: 28TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90071 SC 13D 1 a07-8927_1sc13d.htm SC 13D

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
(Rule 13d-102)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Under the Securities Exchange Act of 1934

Alliance Imaging, Inc.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

08606103

(CUSIP Number)

Todd Molz
Managing Director and General Counsel
Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
(213) 830-6300

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

March 16, 2007

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) OCM Principal Opportunities Fund IV, L.P.

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			x
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Cayman Islands

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 21,629,005

			8.	Shared Voting Power None

			9.	Sole Dispositive Power 21,629,005

			10.	Shared Dispositive Power None

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 21,629,005

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 43.3%

	14.	Type of Reporting Person (See Instructions) PN

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Oaktree Capital Management, LLC

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			x
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization California

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 21,629,005

			8.	Shared Voting Power None

			9.	Sole Dispositive Power 21,629,005

			10.	Shared Dispositive Power None

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 21,629,005

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 43.3%

	14.	Type of Reporting Person (See Instructions) IA, OO

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) OCM Principal Opportunities Fund IV GP, L.P.

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			x
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Cayman Islands

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 21,629,005

			8.	Shared Voting Power None

			9.	Sole Dispositive Power 21,629,005

			10.	Shared Dispositive Power None

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 21,629,005

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 43.3%

	14.	Type of Reporting Person (See Instructions) PN

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) OCM Principal Opportunities Fund IV GP Ltd.

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			x
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Cayman Islands

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 21,629,005

			8.	Shared Voting Power None

			9.	Sole Dispositive Power 21,629,005

			10.	Shared Dispositive Power None

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 21,629,005

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 43.3%

	14.	Type of Reporting Person (See Instructions) PN

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) MTS Health Investors II, L.P.

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			x
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 3,200,000

			8.	Shared Voting Power None

			9.	Sole Dispositive Power 3,200,000

			10.	Shared Dispositive Power None

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 3,200,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 6.4%

	14.	Type of Reporting Person (See Instructions) PN

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) MTS Health Investors II GP, LLC

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			x
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 3,200,000

			8.	Shared Voting Power None

			9.	Sole Dispositive Power 3,200,000

			10.	Shared Dispositive Power None

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 3,200,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 6.4%

	14.	Type of Reporting Person (See Instructions) OO

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) MTS Health Investors II GP Holdings, LLC

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			x
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 3,200,000

			8.	Shared Voting Power None

			9.	Sole Dispositive Power 3,200,000

			10.	Shared Dispositive Power None

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 3,200,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 6.4%

	14.	Type of Reporting Person (See Instructions) OO

Item 1. Security and Issuer.

This statement on Schedule 13D (the “Statement”) relates to the common stock, par value $0.01 per share (“Common Stock”), of Alliance Imaging, Inc., a Delaware corporation (“Issuer”). Issuer’s principal executive offices are located at 1900 South State College Boulevard, Suite 600, Anaheim, California 928061.

Item 2. Identity and Background.

This Schedule 13D is being jointly filed by each of the following persons pursuant to Rule 13d-1(k) promulgated by the Securities and Exchange Commission (the “Commission”) pursuant to Section 13 of the Securities Exchange Act of 1934 as amended (the “Exchange Act”):

(i)		OCM Principal Opportunities Fund IV, L.P., a Cayman Islands exempted limited partnership (“OCM Fund”);

(ii)		Oaktree Capital Management, LLC, a California limited liability company and a registered investment adviser under the Investment Advisers Act of 1940, as amended (“Oaktree”), in its capacity as the investment manager of OCM Fund and the director of OCM Principal Opportunities Fund IV GP Ltd.;

(iii)		OCM Principal Opportunities Fund IV GP, L.P., a Cayman Islands exempted limited partnership (“OCM Fund GP”), in its capacity as the general partner of OCM Fund;

(iv)		OCM Principal Opportunities Fund IV GP Ltd., a Cayman Islands exempted company (“OCM Fund GP Ltd.” and together with OCM Fund, Oaktree and OCM Fund GP, the “Oaktree Reporting Entities”), in its capacity as the general partner of OCM Fund GP;

(v)		MTS Health Investors II, L.P., a Delaware limited partnership (“MTS”);

(vi)		MTS Health Investors II GP, LLC, a Delaware limited liability company (“MTS GP”), in its capacity as general partner of MTS; and

(vii)		MTS Health Investors II GP Holdings, LLC, a Delaware limited liability company (“MTS Holdings” and, together with MTS and MTS GP, the “MTS Reporting Entities”), in its capacity as the Class A Member of MTS GP.

The foregoing entities are hereinafter referred to collectively as the “Reporting Persons”. The Reporting Persons are making this joint filing because they may be deemed to constitute a “group” within the meaning of Section 13(d)(3) of the Exchange Act. The Reporting Persons have entered into a Joint Filing Agreement, dated the date hereof, a copy of which is filed with

this Schedule 13D as Exhibit 1 (which is incorporated herein by reference), pursuant to which the Reporting Persons have agreed to file this Statement jointly in accordance with the provisions of Rule 13d-1(k)(1) under the Exchange Act.

Pursuant to Rule 13d-4 of the Exchange Act, the Reporting Persons expressly declare that the filing of this Statement shall not be construed as an admission that any such person is, for the purposes of Section 13(d) and/or Section 13(g) of the Exchange Act or otherwise, the beneficial owner of any securities covered by this Statement held by any other person.

(a)-(c)

Oaktree Reporting Entities

OCM Fund is principally engaged in the business of investing in securities and obligations of entities over which there is a potential for the OCM Fund to exercise significant influence.

Oaktree is principally engaged in the business of providing investment advice and management services to institutional and individual investors. Oaktree serves as the investment manager of OCM Fund and the director of OCM Fund GP Ltd.

OCM Fund GP is principally engaged in the business of serving as the general partner of OCM Fund.

OCM Fund GP Ltd. is principally engaged in the business of serving as the general partner of OCM Fund GP.

The address of the principal place of business and principal office of the Oaktree Reporting Entities and of the members and executive officers of Oaktree listed below, is c/o Oaktree Capital Management, LLC, 333 South Grand Avenue, 28th Floor, Los Angeles, California 90071.

Executive Officers & Certain Members of Oaktree
Howard S. Marks		Chairman and Principal
Bruce A. Karsh		President and Principal
David Kirchheimer		Principal and Chief Financial and Administrative Officer
Sheldon M. Stone		Principal
David Richard Masson		Principal
Larry W. Keele		Principal
Stephen A. Kaplan		Principal
Kevin L. Clayton		Principal
John B. Frank		Managing Principal
Portfolio Managers of OCM Fund
Ronald N. Beck	Managing Director
Stephen A. Kaplan	Principal

MTS Reporting Entities

MTS is principally engaged in the business of serving as a private investment limited partnership investing primarily in the healthcare industry. The principal business of MTS GP is serving as general partner to MTS and other private investment funds.

The address of the principal place of business and principal office of MTS, and of the members and executive officers of MTS listed below is 623 Fifth Avenue, 15th Floor, New York, New York 10022.

Partners of MTS

Curtis Lane		Senior Managing Director
William J. Kane		Senior Managing Director
Oliver T. Moses		Managing Director
Kenton L. Rosenberry		Managing Director

(d)-(e)

Information with respect to each Reporting Person is given solely by such Reporting Person, and no Reporting Person assumes responsibility for the accuracy or completeness of the information furnished by another Reporting Person.

During the last five years, neither the Reporting Persons, nor, to the best of their knowledge, any of their respective executive officers, directors, general partners, members or portfolio managers (as applicable), (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); or (ii) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceedings was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f)

All individuals listed above are citizens of the United States of America.

Item 3. Source and Amount of Funds or Other Consideration.

OCM Fund and MTS (collectively, the “Investors”) entered into a Stock Purchase Agreement, dated as of March 16, 2007 (the “Purchase Agreement”), with Viewer Holdings, LLC (“Viewer”). Pursuant to the Purchase Agreement and subject to certain conditions described in the Purchase Agreement, Viewer has agreed to sell to the Investors 24,501,505 shares of Common Stock held by Viewer (the “Shares”) at a price of $6.25 per share in cash for an aggregate purchase price of $153,134,406.25 (the “Purchase Price”). The purchase will be funded through working capital. OCM Fund has agreed to contribute $133,134,406.25 to the Purchase Price in exchange for 21,301,505 shares of Common Stock and MTS has agreed to contribute $20,000,000 to the Purchase Price in exchange for 3,200,000 shares of Common Stock. Oaktree Reporting Persons beneficially owned 327,500 shares of Common Stock prior to entering into the Purchase Agreement.

Item 4. Purpose of Transaction.

The Investors will acquire the shares of Common Stock pursuant to the terms of the Purchase Agreement. In connection with such purchase, the Investors have entered into a Governance and Standstill Agreement (the “Standstill Agreement”) with the Issuer, which is described below. The Investors continuously evaluate the Issuer’s businesses and prospects, alternative investment opportunities and all other factors deemed relevant in determining whether additional shares of the Issuer’s Common Stock will be acquired by the Investors or by other accounts or funds associated with the Investors or whether the Investors or any such other accounts or funds will dispose of shares of the Issuer’s Common Stock. At any time, subject to the Standstill Agreement, additional shares of Common Stock may be acquired or some or all of the shares of the Issuer’s Common Stock beneficially owned by the Investors may be sold, in either case in the open market, in privately negotiated transactions or otherwise. Except as otherwise disclosed herein, the Investors currently have no agreements beneficially or otherwise, which would be related to or would result in any of the matters described in Items 4 (a)-(j) of Schedule 13D; however, as part of their ongoing evaluation of this investment and investment alternatives, the Investors may consider such matter and, subject to applicable law, may formulate a plan with respect to such matters, and from time to time, the Investors may hold discussions with or make formal proposals to management or the Board of Directors of the Issuer, other shareholders of the Issuer or other third parties regarding such matters.

Stock Purchase Agreement

Pursuant to the Stock Purchase Agreement, Viewer has agreed to sell the Shares to the Investors (and any designee, successor or assign of the Investors).

Subject to the satisfaction or waiver of certain terms and conditions of the Purchase Agreement, the Investors will own in the aggregate approximately 49.7% of the issued and outstanding shares of Common Stock. The number of Shares to be purchased may be adjusted, as necessary, upon completion of due diligence by the Investors, to ensure that there is no “Change of Control” as such term is defined under the indenture governing the Issuer’s 7 ¼% Senior Subordinated Notes due 2012 (the “Notes”).

Further, Viewer has agreed to assign to the Investors substantially all of its rights and interest under the Registration Rights Agreement, dated November 9, 1999, among the Issuer, Viewer, Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P. and Apollo (U.K.) Partners III, L.P. (the “Registration Rights Agreement”).

The obligations of Viewer and the Investors to consummate the transactions contemplated by the Purchase Agreement are subject to certain conditions, including receipt of any necessary governmental approvals or consents, receipt of all necessary waivers and consents under the Issuer’s Credit Agreement and the termination of the certain letter agreement, dated November 2, 1999, between the Issuer and Kohlberg Kravis Roberts & Co., L.P. relating to management, consulting and financial services, and other customary closing conditions.

Governance and Standstill Agreement

In connection with the Purchase Agreement, the Issuer and the Investors have entered into the Standstill Agreement. Pursuant to the Standstill Agreement, the parties have agreed that, until the third anniversary of the Investors’ acquisition of Viewer’s Shares (the “Standstill Period”), the Board of Directors shall be fixed at seven (7) members, which number shall not be modified except pursuant to an affirmative vote of 66 2/3% of the directors then in office and otherwise in accordance with the Issuer’s Certificate of Incorporation and Bylaws. Furthermore, the parties

agreed that, so long as the Investors beneficially own an aggregate of at least 35% of the total number of shares of outstanding Common Stock, the Investors will have the right to designate three (3) nominees to the Board of Directors (each, a “Designee,” and collectively, the “Designees”). Each Designee shall be nominated to serve in a different class of the Board of Directors and if any Designee on the Board of Directors shall cease to serve as a director for any reason (other than the failure of the stockholders of the Company to elect such person as director), the resulting vacancy shall be filled by another Designee, subject to reasonable prior approval of the Nominating/Corporate Governance Committee of the Board of Directors of the Issuer. Stephen Kaplan, Michael P. Harmon and Curtis S. Lane shall be the initial Designees for election to the Board of Directors. In the event that the Investors reduce their holdings below certain thresholds, their right to designate nominees will be reduced as follows. In the event that the Investors beneficially own less than 35% but at least 25% of the total number of outstanding Common Stock, the Investors shall have the right to nominate two (2) Designees, a Class II Director and a Class III Director. In that case, the number of Designees on committees of the Board of Directors, as described below, shall be reduced by one. In the event that the Investors beneficially own less than 25% but at least 15% of the total number of outstanding Common Stock, the Investors shall have the right to nominate one (1) Designee, a Class III Director. In that case, the Designee shall not be entitled to sit on any of the committees of the Board of Directors. In the event that the Investors beneficially own less than 15% of the total number of outstanding Common Stock, the Investors shall have no contractual right to nominate any directors, other than the Investors’ rights as stockholders.

The Investors and the Issuer have further agreed to disband the Executive Committee of the Board of Directors and, for the duration of the Standstill Period, to maintain committees of the Board of Directors as follows: a) no Designee shall be a member of the Audit Committee, b) two Designees shall be members of the Compensation Committee, which will consist of four members in total, c) two Designees, neither of which shall be chairperson, shall be members of the Nominating/Corporate Governance Committee, which will consist of four members in total, and d) a Finance Committee, which will consist of three members, will be created with one Designee as a member.

Pursuant to the Standstill Agreement, the Investors have agreed that, for the Standstill Period, none of the Investors will, directly or indirectly, nor will any of them authorize or direct any of its representatives to (and will take appropriate action against such representatives to discourage), acquire, or cause to be acquired, beneficial ownership of additional shares of Common Stock that would cause the Investors’ aggregate beneficial ownership of Common Stock to exceed the 49.9% of the total number of shares, without the prior written consent of a majority of the Directors who are not Designees or employees of Issuer, in their sole and absolute discretion.

The foregoing descriptions of the Purchase Agreement and the Standstill Agreement are qualified in their entirety by reference to the full text of the Purchase Agreement and the Standstill Agreement. The Purchase Agreement and the Standstill Agreement are filed as Exhibit 2 and Exhibit 3, respectively, and are incorporated herein by reference.

The OCM Reporting Parties and the MTS Reporting Parties intend to enter into an agreement to govern the management and voting of their combined shares and the exercise of their rights under the Standstill Agreement. This Statement will be amended upon execution of such agreement.

The Investors may decide to assign a portion of their rights described herein to one or more other investors. This Statement will be amended if they do so.

Except as set forth herein, none of the Reporting Persons has any present plans or proposals which relate to or would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D.

Item 5. Interest in Securities of the Issuer.

(a)-(b)

As of the date of this Statement, Viewer is the record owner of the Shares. Pursuant the terms of the Purchase Agreement, at the Closing Date, the Investors will own 24,829,005 shares of Common Stock, constituting approximately 49.7% of the issued and outstanding Common Stock. Oaktree, as investment manager of OCM Fund and the director of OCM Fund GP Ltd., OCM Fund GP, as the general partner of OCM Fund, and OCM Fund GP Ltd., as the general partner of OCM Fund GP, each may be deemed to beneficially own the shares that would be held by OCM Fund because they have discretionary authority and control over all of the assets of OCM Fund pursuant to the partnership agreement for OCM Fund, including the power to enter into the transactions contemplated by the Purchase Agreement.

MTS, MTS GP, as the general partner of MTS, and MTS Holdings, as Class A Member of MTS GP may be deemed to share beneficial ownership of the Shares because each has agreed to act together with OCM Fund for the purposes of acquiring the Shares and therefore may be deemed to constitute a “group” within the meaning of Section 13(d)(3) of the Exchange Act.

Unless and until the Closing Date, the Reporting Persons do not have any rights as a stockholder of the Issuer with respect to the Shares.

Pursuant to Rule 13d-4 of the Act, the Reporting Persons declare that filing this Statement shall not be construed as an admission that any such person is, for the purposes of Section 13(d) and/or Section 13(g) of the Act, the beneficial owner of any securities covered by this Statement except to the extent of such person’s pecuniary interest in shares of Common Stock.

All ownership percentages of the securities reported in this Statement are based upon 50,003,072 shares of Common Stock outstanding as of March 16, 2007, as represented by the Issuer on March 16, 2007.

(c)

Other than the transaction described in Item 3, none of the Reporting Persons, and to the best of their respective knowledge, none of their respective executive officers, directors or general partners has effected any transaction involving the Issuer’s Common Stock during the last 60 days from the date hereof.

(d)

Except as set forth in this Item 5, no other person is known to have the right to receive or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.

(e)

Not Applicable

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

The responses set forth in Item 3 and Item 4 are incorporated herein by reference.

Except as described above and elsewhere in this Statement, as of the date hereof, there are no other contracts, understandings or relationships (legal or otherwise) among the parties named in Item 2 hereto and between such persons and any person with respect to any of the Shares.

A copy of the Purchase Agreement is filed hereto as Exhibit 2 and a copy of the Standstill Agreement is filed hereto as Exhibit 3.

Item 7. Material to be Filed as Exhibits.

The following are filed herewith as Exhibits to this Schedule 13D:

Exhibit 1	A written agreement relating to the filing of the joint acquisition statement as required by Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended.

Exhibit 2	Stock Purchase Agreement, dated as of March 16, 2007, by and between OCM Principal Opportunities Fund IV, L.P., MTS Health Investors II, L.P. and Viewer Holdings, LLC.

Exhibit 3	Governance and Standstill Agreement, dated March 16, 2007 by and among Alliance Imaging, Inc., OCM Principal Opportunities Fund IV, L.P., and MTS Health Investors II, L.P.

SIGNATURE

After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

Dated: March 23, 2007

	OCM PRINCIPAL OPPORTUNITIES FUND IV, L.P.

	By:	OCM PRINCIPAL OPPORTUNITIES FUND IV GP, L.P., its General Partner
	By:	OCM PRINCIPAL OPPORTUNITIES FUND IV GP LTD., its General Partner
	By:	OAKTREE CAPITAL MANAGEMENT, LLC, a Director

	By:	/s/ Michael P. Harmon
	Name:	Michael P. Harmon
	Title:	Managing Director

	By:	/s/ Emily Alexander
	Name:	Emily Alexander
	Title:	Vice President, Legal


	OCM PRINCIPAL OPPORTUNITIES FUND IV GP, L.P.

	By:	OCM PRINCIPAL OPPORTUNITIES FUND IV GP LTD., its General Partner
	By:	OAKTREE CAPITAL MANAGEMENT, LLC, a Director

	By:	/s/ Michael P. Harmon
	Name:	Michael P. Harmon
	Title:	Managing Director

	By:	/s/ Emily Alexander
	Name:	Emily Alexander
	Title:	Vice President, Legal

	OCM PRINCIPAL OPPORTUNITIES FUND IV GP LTD.

	By:	OAKTREE CAPITAL MANAGEMENT, LLC, the Director

	By:	/s/ Michael P. Harmon
	Name:	Michael P. Harmon
	Title:	Managing Director

	By:	/s/ Emily Alexander
	Name:	Emily Alexander
	Title:	Vice President, Legal

	OAKTREE CAPITAL MANAGEMENT, LLC

	By:	/s/ Michael P. Harmon
	Name:	Michael P. Harmon
	Title:	Managing Director

	By:	/s/ Emily Alexander
	Name:	Emily Alexander
	Title:	Vice President, Legal

	MTS HEALTH INVESTORS II, L.P.

	By:	MTS HEALTH INVESTORS II GP, LLC, its General Partner
	By:	MTS HEALTH INVESTORS II GP HOLDINGS, LLC, the Class A Member

	By:	/s/ Curtis S. Lane
	Name:	Curtis S. Lane
	Title:	Senior Managing Director

	MTS HEALTH INVESTORS II GP, LLC

	By:	MTS HEALTH INVESTORS II GP HOLDINGS, LLC, the Class A Member

	By:	/s/ Curtis S. Lane
	Name:	Curtis S. Lane
	Title:	Senior Managing Director

	MTS HEALTH INVESTORS II GP HOLDINGS, LLC

	By:	/s/ Curtis S. Lane
	Name:	Curtis S. Lane
	Title:	Senior Managing Director

EX-1 2 a07-8927_1ex1.htm EX-1

EXHIBIT 1

JOINT FILING AGREEMENT

Each of the undersigned acknowledges and agrees that the foregoing Statement on Schedule 13D is filed on behalf of the undersigned. Each of the undersigned acknowledges that it shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning it contained therein, but shall not be responsible for the completeness and accuracy of the information concerning the other, except to the extent that he or it knows or has reason to believe that such information is inaccurate.

Dated as of March 31, 2007.

	OCM PRINCIPAL OPPORTUNITIES FUND IV, L.P.

	By:	OCM PRINCIPAL OPPORTUNITIES FUND IV GP, L.P., its General Partner
	By:	OCM PRINCIPAL OPPORTUNITIES FUND IV GP LTD., its General Partner
	By:	OAKTREE CAPITAL MANAGEMENT, LLC, the Director


	By:	/s/ Michael P. Harmon
	Name:	Michael P. Harmon
	Title:	Managing Director

	By:	/s/ Emily Alexander
	Name:	Emily Alexander
	Title:	Vice President, Legal


	OCM PRINCIPAL OPPORTUNITIES FUND IV GP, L.P.

	By:	OCM PRINCIPAL OPPORTUNITIES FUND IV GP LTD., its General Partner
	By:	OAKTREE CAPITAL MANAGEMENT, LLC, the Director

	By:	/s/ Michael P. Harmon
	Name:	Michael P. Harmon
	Title:	Managing Director

	By:	/s/ Emily Alexander
	Name:	Emily Alexander
	Title:	Vice President, Legal

Exhibit A-1

	OCM PRINCIPAL OPPORTUNITIES FUND IV GP LTD.

	By:	OAKTREE CAPITAL MANAGEMENT, LLC, a Director

	By:	/s/ Michael P. Harmon
	Name:	Michael P. Harmon
	Title:	Managing Director

	By:	/s/ Emily Alexander
	Name:	Emily Alexander
	Title:	Vice President, Legal


	OAKTREE CAPITAL MANAGEMENT, LLC

	By:	/s/ Michael P. Harmon
	Name:	Michael P. Harmon
	Title:	Managing Director

	By:	/s/ Emily Alexander
	Name:	Emily Alexander
	Title:	Vice President, Legal


	MTS HEALTH INVESTORS II, L.P.

	By:	MTS HEALTH INVESTORS II GP, LLC, its General Partner
	By:	MTS HEALTH INVESTORS II GP HOLDINGS, LLC, the Class A Member

	By:	/s/ Curtis S. Lane
	Name:	Curtis S. Lane
	Title:	Senior Managing Director

Exhibit A-2

	MTS HEALTH INVESTORS II GP, LLC

	By:	MTS HEALTH INVESTORS II GP HOLDINGS, LLC, the Class A Member

	By:	/s/ Curtis S. Lane
	Name:	Curtis S. Lane
	Title:	Senior Managing Director


	MTS HEALTH INVESTORS II GP HOLDINGS, LLC

	By:	/s/ Curtis S. Lane
	Name:	Curtis S. Lane
	Title:	Senior Managing Director

Exhibit A-3

EX-2 3 a07-8927_1ex2.htm EX-2

Exhibit 2

STOCK PURCHASE AGREEMENT

By and Among

OCM Principal Opportunities Fund IV, L.P.
MTS Health Investors II, L.P.

and

Viewer Holdings LLC

Dated as of
March 16, 2007

Exhibit A

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS AND TERMS

Section 1.1

Certain Definitions

Section 1.2

Other Definitional Provisions

ARTICLE II CLOSING; PURCHASE AND SALE OF SHARES

Section 2.1

Closing

Section 2.2

Purchase and Sale of the Shares

Section 2.3

Conveyance

Section 2.4

Consideration

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER

Section 3.1

Organization

Section 3.2

Authority; Binding Effect

Section 3.3

Title to Shares; Conveyance

Section 3.4

No Violation; Consents and Approvals

Section 3.5

Brokers

Section 3.6

No Other Representations

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Section 4.1

Organization

Section 4.2

Authority; Binding Effect

Section 4.3

No Violation; Consents and Approvals.

Section 4.4

Nature of Investment

Section 4.5

Brokers

ARTICLE V COVENANTS

Section 5.1

Reasonable Best Efforts

Section 5.2

Consents

Section 5.3

Antitrust Notification

Section 5.4

Notification of Certain Matters

Section 5.5

Resignations

ARTICLE VI CONDITIONS TO CLOSING

Section 6.1

Mutual Conditions to the Obligations of the Parties

Section 6.2

Conditions to the Obligations of the Purchasers

Section 6.3

Conditions to the Obligations of the Seller

ARTICLE VII TERMINATION; SURVIVAL			12

	Section 7.1	Termination; Survival	12
	Section 7.2	Effect of Termination	12
	Section 7.3	Survival	12

ARTICLE VIII MISCELLANEOUS			13

	Section 8.1	Notices	13
	Section 8.2	Extension; Amendment; Waiver	14
	Section 8.3	Time of Essence	14
	Section 8.4	Assignment	14
	Section 8.5	Entire Agreement	14
	Section 8.6	Parties in Interest	14
	Section 8.7	Expenses	15
	Section 8.8	Governing Law; Jurisdiction	15
	Section 8.9	Counterparts	15
	Section 8.10	Headings	15
	Section 8.11	Further Assurances	15
	Section 8.12	Limited Liability of Members of Seller	15

STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of March 16, 2007, by and among OCM Principal Opportunities Fund IV, L.P., a California limited partnership (“OCM Fund”), and MTS Health Investors II, L.P., a Delaware limited partnership (“MTS” and, together with OCM Fund, the “Purchasers”), and Viewer Holdings LLC, a Delaware limited liability company (the “Seller”).

RECITALS

WHEREAS, the Seller is the record and beneficial owner of an aggregate of 25,944,570 shares of common stock, par value $0.01 per share (“Common Stock”), of Alliance Imaging, Inc., a Delaware corporation (the “Company”);

WHEREAS, the Purchasers desire to acquire from the Seller (the “Share Purchase”), and the Seller desires to sell to the Purchasers, all of their right, title and interest in and to 24,501,505 shares of Common Stock (the “Shares”), on the terms and subject to the conditions contained herein;

WHEREAS, this Agreement and the transactions contemplated hereby have been approved by all requisite action on the part of the Seller and the Purchasers; and

WHEREAS, in connection herewith, the Purchasers and the Company are entering into a Governance and Standstill Agreement (the “Governance and Standstill Agreement”).

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND TERMS

Section 1.1 Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

“Affiliate” shall mean, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. The term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise.

“Agreement” shall mean this Agreement, together with the Schedules and Exhibits hereto, as the same may be amended or supplemented from time to time in accordance with the terms hereof.

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banks in the City of New York are authorized or obligated by Law or executive order to close.

“Closing” shall mean the closing of the transactions contemplated by this Agreement, as provided for in Section 2.1 hereof.

“Closing Date” shall have the meaning set forth in Section 2.1 hereof.

“Common Stock” shall have the meaning set forth in the recitals hereto.

“Company” shall have the meaning set forth in the recitals hereto.

“Consents” shall have the meaning set forth in Section 3.4(b) hereof.

“Contract” shall mean any bond, note, mortgage, deed of trust, lease, commitment, obligation, understanding, arrangement, indenture, other evidence of indebtedness, guarantee, license, agreement or other contract or instrument.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Governance and Standstill Agreement” shall have the meaning set forth in the recitals hereto.

“Governmental Authority” shall have the meaning set forth in Section 3.4(b) hereof.

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“KKR” shall have the meaning set for in Section 3.4(c) hereof.

“KKR Management Agreement” shall have the meaning set for in Section 3.4(c) hereof.

“Laws” shall mean any federal, state, local or foreign law, statute, ordinance, rule, regulation, order, judgment or decree, administrative order or decree, administrative or judicial decision, and any other executive or legislative proclamation.

“Liens” shall mean any and all liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or other adverse interests or restrictions on title or transfer.

“Person” shall mean a natural person, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity or organization.

“Purchasers” shall have the meaning set forth in the preamble hereto.

“Registration Rights Agreement” shall have the meaning set for in Section 3.3 hereto.

“Related Party” shall have the meaning set for in Section 8.12 hereof.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Seller” shall have the meaning set forth in the preamble hereto.

“Share Purchase” shall have the meaning set forth in the recitals hereto.

“Shares” shall have the meaning set forth in the preamble hereto.

“Termination Date” shall have the meaning set forth in Section 7.1(b) hereof.

Section 1.2 Other Definitional Provisions.

(a) The words “hereof”, “herein”, “hereto” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(b) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.

(d) The word “including” shall mean including, without limitation, and the words “include” and “includes” shall have corresponding meanings.

ARTICLE II

CLOSING;
PURCHASE AND SALE OF SHARES

Section 2.1 Closing. The closing of the Share Purchase (the “Closing”) shall take place at the offices of Latham & Watkins LLP, 140 Scott Drive, Menlo Park, California 94025, at 9:00 a.m. (local time), on the second Business Day following the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions precedent specified in Article VI, or at such other time and place as the parties hereto may mutually agree. The date on which the Closing occurs is referred to herein as the “Closing Date.”

Section 2.2 Purchase and Sale of the Shares. Upon the terms and subject to the conditions of this Agreement, at the Closing, the Seller shall sell, convey, assign, transfer and deliver to the Purchasers, and the Purchasers shall, severally and not jointly, purchase, acquire and accept from the Seller, all right, title and interest in and to the Shares, free and clear of any and all Liens, except for any Liens arising under the Securities Act or any applicable state securities Laws.

Section 2.3 Conveyance. At the Closing, the Seller shall deliver to each Purchaser certificates representing the number of Shares set forth opposite such Purchaser’s name on Schedule I hereto, each such certificate to be duly and validly endorsed in favor of such Purchaser or accompanied by a separate stock power duly and validly executed by the Seller.

Section 2.4 Consideration. At the Closing, in consideration of such sale, conveyance, assignment, transfer and delivery of the Shares by the Seller, each Purchaser, severally and not jointly, shall pay or cause to be paid to the Seller, that amount set forth opposite such Purchaser’s name on Schedule I hereto; provided, however, if the conditions set forth in Sections 6.1 and 6.2 hereof have been satisfied or waived, and MTS does not fund the amount set forth opposite its name on Schedule I hereto, the OCM Fund shall fund such amount and shall acquire the shares set forth opposite MTS’s name on Schedule I hereto.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF
THE SELLER

The Seller hereby represents and warrants to the Purchasers as follows:

Section 3.1 Organization. The Seller is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate all of its properties and assets and to conduct its business as it is now being conducted.

Section 3.2 Authority; Binding Effect. The Seller has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to

consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized by all necessary limited liability action on the part of the Seller, and no other action on the part of the Seller is required to authorize the execution, delivery and performance hereof, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except to the extent enforcement may be subject to (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws affecting enforcement of creditors’ rights generally and (ii) equitable limitations on the availability of specific remedies (whether considered in a proceeding in equity or at law).

Section 3.3 Title to Shares; Conveyance. The Seller is the record and beneficial owner of the Shares and has good and valid title to all of the Shares, free and clear of all Liens, except Liens arising under the Securities Act or any applicable state securities Laws. The stock certificates, stock powers, endorsements, assignments and other instruments to be executed and delivered by the Seller to the Purchasers at the Closing will be duly executed and delivered by the Seller. The Seller has certain registration rights with respect to the Shares under that certain Registration Rights Agreement, dated as of November 2, 1999, by and among the Company, the Seller, Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P. and Apollo (U.K.) Partners III, L.P. (the “Registration Rights Agreement”), and the assignment of the Seller’s registration rights to be executed and delivered by the Seller to the Purchasers at the Closing will be valid and binding obligations of the Seller, enforceable against the Seller in accordance with its terms.

Section 3.4 No Violation; Consents and Approvals.

(a) The execution and delivery of this Agreement by the Seller and the consummation by the Seller of the transactions contemplated hereby will not (i) conflict with or violate the Certificate of Formation or limited liability company agreement of the Seller, as currently in effect, (ii) conflict with or violate any Laws applicable to the Seller or by which its properties or assets are bound or are subject, or (iii) result in any breach of, constitute a default (or an event that with notice or lapse of time, or both, would constitute a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or require payments under, or result in the creation of a Lien on any of the properties or assets of the Seller under, any material Contract to which the Seller is a party or by which its properties or assets are bound or subject, which breach, default, conflict, right of termination, amendment, acceleration, cancellation, payment or Lien would materially impair the Seller’s ability to perform its obligations hereunder or to consummate the transactions contemplated hereby.

(b) The execution and delivery of this Agreement by the Seller do not, and the performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby will not, require the Seller to make any filing with, obtain any permit, authorization, consent or approval of, or given any notice to (“Consents”), any court, tribunal,

legislative, executive or regulatory authority or agency (a “Governmental Authority”), or any third party, except for filings pursuant to the Securities Act and the Exchange Act.

(c) On the date hereof and as of the Closing Date, the aggregate amount of all accrued and unpaid fees and expenses under that certain letter agreement (the “KKR Management Agreement”), dated as of November 2, 1999, by and among the Company and Kohlberg Kravis Roberts & Co., L.P. (“KKR”) shall not exceed $475,000.

Section 3.5 Brokers. The Seller has not entered into any agreement or arrangement entitling any agent, broker, investment banker, financial advisor or other firm or Person to any brokers’ or finders’ fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement.

Section 3.6 No Other Representations. Except for the representations and warranties contained in this Article III and the warranties that inure to the benefit of a purchaser of stock under Section 8-108 of the Uniform Commercial Code, the Purchasers acknowledge and agree that none of Seller, the Company, or any Affiliates of Seller or the Company nor any other Person has made or makes any other express, implied or statutory representation or warranty with respect to Purchasers’ acquisition of the Shares, including any representations or warranties as to the Company, its business, its future financial condition or results of operations, including any financial projections provided by the Company, Seller or their representatives to the Purchasers.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES
OF THE PURCHASERS

Each of the Purchasers hereby represents and warrants severally and not jointly, to the Seller as follows:

Section 4.1 Organization. Such Purchaser is a limited partnership duly formed, validly existing and in good standing under the laws of the State of California or the laws of the State of Delaware, as the case may be, and has all requisite power and authority to own, lease and operate all of its properties and assets and to conduct its business as it is now being conducted.

Section 4.2 Authority; Binding Effect. Such Purchaser has all requisite limited partnership power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby have been duly authorized by all necessary limited partnership action on the part of such Purchaser, and no other limited partnership action on the part of such Purchaser is required to authorize the execution, delivery and performance hereof, or the consummation of the

ransactions contemplated hereby. This Agreement has been duly executed and delivered by such Purchaser and constitutes the legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except to the extent enforcement may be subject to (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws affecting enforcement of creditors’ rights generally and (ii) equitable limitations on the availability of specific remedies (whether considered in a proceeding in equity or at law).

Section 4.3 No Violation; Consents and Approvals.

(a) The execution and delivery of this Agreement by such Purchaser do not, and the performance of this Agreement by such Purchaser and the consummation of the transactions contemplated hereby will not, (i) conflict with or violate the Certificate of Limited Partnership or limited partnership agreement or similar organizational documents, in each case as currently in effect, of such Purchaser, (ii) conflict with or violate any Laws applicable to such Purchaser or by or to which any of its properties or assets are bound or subject, or (iii) result in any breach of, constitute a default (or an event that with notice or lapse of time or both would constitute a material default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or require payment under, or result in the creation of a Lien on any of the properties or assets of such Purchaser under, any material Contract to which such Purchaser is a party or by or to which such Purchaser or any of its properties or assets are bound or subject, which breach, default, conflict, right of termination, amendment, acceleration or cancellation, payment or Lien would materially impair such Purchaser’s ability to perform its obligations hereunder or to consummate the transactions contemplated hereby.

(b) The execution and delivery of this Agreement by such Purchaser do not, and the performance by such Purchaser of this Agreement and the consummation of the transactions contemplated hereby will not, require such Purchaser to obtain any Consents from any Governmental Authority, or any third party, except for applicable requirements of the HSR Act, the Securities Act and the Exchange Act.

Section 4.4 Nature of Investment.

(a) Such Purchasers is acquiring the Shares as principal for its own account for investment purposes only and not with a view to distributing or reselling such Shares or any part thereof.

(b) Such Purchaser is an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Purchaser, either alone or together with their representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the investment in the Shares, and have so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

(c) Such Purchaser acknowledges that it has had (i) access to information about the Company and its subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable such Purchaser to evaluate its investment; (ii) the opportunity to ask such questions as they have deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the sale of the Shares and the merits and risks of investing in the Shares; and (iii) the opportunity to obtain such additional information that the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to its investments.

(d) Such Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(e) Such Purchaser understands and acknowledges that (i) the Shares are being offered and sold without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act, (ii) the availability of such exemption depends in part on, and the Seller will rely upon the accuracy and truthfulness of, the foregoing representations and such Purchaser hereby consents to such reliance, and (iii) the Shares are “restricted securities” for purposes of the Securities Act and rules thereunder and may not be resold without registration under the Securities Act or an exemption therefrom, and the certificates representing such shares will bear a restrictive legend to such effect.

Section 4.5 Brokers. Such Purchaser has not entered into any agreement or arrangement entitling any agent, broker, investment banker, financial advisor or other firm or Person to any brokers’ or finders’ fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement.

ARTICLE V

COVENANTS

Reasonable Best Efforts. Upon the terms and subject to the conditions of this Agreement, the Seller and the Purchasers each agree to use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement as promptly as practicable (including satisfaction, but not waiver, of the conditions to Closing set forth in Article VI hereof).

Section 5.2 Consents. Without limiting the generality of Section 5.1 hereof, each of the parties hereto shall (i) use reasonable best efforts to obtain all Consents, if any, of Governmental Authorities and third parties which are to be obtained by such party and are necessary in connection with the consummation of the transactions contemplated by this Agreement prior to the Closing, and (ii) provide reasonable cooperation and assistance reasonably requested by the Company with regard to the Company obtaining all Consents, if any, of Governmental Authorities and third parties which are to be obtained by the Company and are necessary in connection with the consummation of the transactions contemplated by this Agreement prior to the Closing, including but not limited to those Consents set forth in Schedule 5.2. Notwithstanding the foregoing, neither the Purchasers nor the Seller shall have any obligation to pay any fee to any third party (other than filing or other fees payable to Governmental Authorities) for the purpose of obtaining any Consent or any costs and expenses of any third party resulting from the process of obtaining such Consents. Each of the parties hereto shall make or cause to be made all filings and submissions under laws and regulations applicable to it as may be required for the consummation of the transactions contemplated by this Agreement.

Section 5.3 Antitrust Notification. Each Purchaser shall use its reasonable best efforts to file, as soon as practicable after the date hereof but in any event within five (5) Business Days thereafter, the notification and report forms required for the transactions contemplated by this Agreement with the United States Federal Trade Commission and the United States Department of Justice, and shall provide any supplemental information requested in connection with such notification and report forms pursuant to the HSR Act. The Seller shall furnish to the Purchasers’ counsel such information and assistance as is reasonably necessary to the Purchasers and reasonably available to the Seller in connection with the Purchasers’ preparation of any filing or submission that is necessary under the HSR Act.

Section 5.4 Notification of Certain Matters. The Seller shall give prompt notice to each Purchaser, and each Purchaser shall give prompt notice to the Seller, of the occurrence, or non-occurrence, of any event the occurrence or non-occurrence of which would be reasonably likely to cause (i) any representation or warranty of the Seller or such Purchaser, as the case may be, contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Closing or (ii) the Seller or such Purchaser, as the case may be, to fail to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.4 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice.

Section 5.5 Resignations. At or prior to the Closing Date, the Seller shall cause Michael W. Michelson, James C. Momtazee and Kenneth W. Freeman to resign from the Board of Directors of the Company and each Committee thereof.

ARTICLE VI

CONDITIONS TO CLOSING

Section 6.1 Mutual Conditions to the Obligations of the Parties. The respective obligations of each party hereto to consummate the transactions contemplated by this Agreement are subject to the satisfaction or, to the extent permitted by applicable Law, waiver (in the case of Sections 6.1(a) and 6.1(b) only, it being understood and agreed that the condition in Section 6.1(c) shall not be waivable by either the Seller or either Purchaser without the written consent of the Company) at or prior to the Closing of each of the following conditions:

(a) No Injunctions or Legal Prohibitions. No temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by a court of competent jurisdiction which prevents the consummation of the transactions contemplated hereby shall have been issued and remain in effect, and no statute, rule or regulation shall have been enacted, promulgated or enforced by any Governmental Authority which makes the consummation of the transactions contemplated hereby illegal; provided, that the parties shall use their reasonable best efforts to have any temporary or preliminary order or injunction lifted.

(b) HSR Act. The applicable waiting period under the HSR Act shall have expired or been terminated.

(c) Credit Agreement. The Company shall have obtained all necessary waivers, consents or amendments under the Credit Agreement, dated as of November 2, 1999, as amended, by and among the Company, the financial parties thereto and Deutsche Bank Trust Company Americas, as administrative agent, to consummate the transactions contemplated by this Agreement.

Section 6.2 Conditions to the Obligations of the Purchasers. The obligation of each of the Purchasers to consummate the transactions contemplated by this Agreement is subject to the satisfaction at or prior to the Closing of the following conditions (unless waived, to the extent permitted by applicable Law, by the Purchasers):

(a) Representations and Warranties. The representations and warranties of the Seller contained in Article III hereof that are qualified as to materiality shall be true and correct in all respects, and such representations and warranties that are not so qualified shall be true and correct in all material respects, in each case, as of the date when made and at and as of the Closing Date, as though such representations and warranties were made at and as of such date.

(b) Performance. The Seller shall have performed and complied with, in all material respects, all covenants and agreements required by this Agreement to be performed or complied with by the Seller on or prior to the Closing Date.

(c) Officer’s Certificate. The Seller shall have delivered to the Purchasers a certificate, dated as of the Closing Date, executed by a duly authorized officer of the Seller, certifying the satisfaction of the conditions set forth in subsections 6.2(a) and (b) hereof.

(d) Instrument of Assignment. The Seller shall have delivered to each Purchaser certificates representing the number of Shares set forth opposite such Purchaser’s name on Schedule I hereto, each such certificate duly and validly endorsed in favor of such Purchaser or accompanied by a separate stock power duly and validly executed by the Seller.

(e) Assignment of Registration Rights. The Seller shall have delivered to the Purchasers an instrument of assignment, in the form attached hereto as Exhibit A, relating to the assignment to the Purchasers of any and all of the Seller’s registration rights with respect to the Shares under the Registration Rights Agreement.

(f) Termination of Management Agreement. The Seller and the Company shall have executed and delivered an amendment, in the form attached hereto as Exhibit B, relating to the termination of future performance and payment obligations under the KKR Management Agreement.

Section 6.3 Conditions to the Obligations of the Seller. The obligation of the Seller to consummate the transactions contemplated by this Agreement is subject to the satisfaction at or prior to the Closing of the following conditions (unless waived, to the extent permitted by applicable Law, by the Seller):

(a) Representations and Warranties. The representations and warranties of the Purchasers contained herein which are qualified as to materiality shall be true and correct in all respects, and such representations and warranties as are not so qualified shall be true and correct in all material respects, as of the date when made and at and as of the Closing Date, as though such representations and warranties were made at and as of such date.

(b) Performance. The Purchasers shall have performed and complied with, in all material respects, all agreements, conditions, covenants and obligations required by this Agreement to be performed or complied with by the Purchasers on or prior to the Closing Date.

(c) Officer’s Certificate. The Purchasers shall have delivered to the Seller a certificate, dated as of the Closing Date, executed by a duly authorized officer of each Purchaser, certifying to the satisfaction of the conditions set forth in subsections 6.3(a) and (b) hereof.

(d) Payment of Purchase Price. Each Purchaser shall have delivered to Seller by wire transfer of federal or other immediately available funds to the account designated by Seller the amount set forth opposite such Purchaser’s name on Schedule I hereto.

ARTICLE VII

TERMINATION; SURVIVAL

Section 7.1 Termination; Survival. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing:

(a) by mutual written agreement of the Purchasers and the Seller;

(b) at any time on or after May 15, 2007 (the “Termination Date”), by either the Purchasers or the Seller, by giving written notice of such termination to the other parties, if the Closing shall not have occurred on or prior to the Termination Date and if the failure to consummate the Closing by the Termination Date is not the result of any breach of the representations or warranties made by, or the failure to perform or comply with any of the agreements or covenants hereof to be performed or complied with prior to the Closing by, the party seeking to terminate this Agreement); or

(c) by either the Purchasers or the Seller by written notice of such termination to the other parties if any event, fact or condition shall occur or exist that makes it impossible to satisfy a condition to the terminating party’s obligations to consummate the transactions contemplated by this Agreement, unless the occurrence or existence of such event, fact or condition shall be due to the failure of the terminating party to perform or comply with any of the agreements or covenants hereof to be performed or complied with by the terminating party prior to the Closing.

Section 7.2 Effect of Termination. In the event of the termination of this Agreement in accordance with Section 7.1 hereof, this Agreement shall thereafter become void and have no effect and the transactions contemplated hereby shall be abandoned, and no party hereto shall have any liability to the other party hereto or their respective Affiliates, directors, officers or employees, except for the obligations of the parties hereto contained in this Section 7.2 and in Sections 8.1, 8.6, 8.7 and 8.12 hereof, and except that nothing herein will limit or restrict the rights or remedies of any party hereto against the other parties for any material breach of this Agreement arising prior to termination. If this Agreement is terminated pursuant to Section 7.1 hereof, all filings, applications and other submissions made pursuant to Sections 5.1, 5.2 and 5.3 hereof shall, to the extent practicable, be withdrawn from the agency or other person to which made.

Section 7.3 Survival. The representations and warranties in this Agreement and in any certificate delivered pursuant hereto shall terminate as of the Closing and shall not survive the Closing for any purpose. The covenants and agreements contained in this Agreement shall terminate as of the Closing and shall not survive the Closing for any purpose, except as specifically set forth herein.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Notices. All notices or other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the party for whom it is intended, if delivered by registered or certified mail, return receipt requested, or by a national courier service, or if sent by facsimile (with receipt of confirmation of delivery), to the person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person:

To the Seller:

Viewer Holdings LLC
c/o Kohlberg Kravis Roberts & Co., L.P.
2800 Sand Hill Road
Menlo Park, CA 94025
Attention: Michael W. Michelson
Fax: (650) 233-6561

With a copy to:

Latham & Watkins LLP
140 Scott Drive
Menlo Park, CA 94025
Attention: Peter F. Kerman
Nicholas S. O’Keefe
Fax: (650) 463-2600

To the Purchasers:

OCM Principal Opportunities Fund IV, L.P.
c/o Oaktee Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
Attention: Michael P. Harmon
Fax: (213) 830-6393

MTS Health Investors II, L.P.
c/o MTS Health Partners
623 Fifth Avenue, 15th Floor
New York, NY 10022
Attention: Curtis S. Lane
Fax: (212) 887-2111

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Suite 3400
Los Angeles, CA 90071
Attention: Jeffrey H. Cohen
Rick C. Madden
Fax: (213) 621-5288 and (213) 621-5379

Any such notification shall be deemed delivered (i) upon receipt, if delivered personally, (ii) on the next business day, if sent by national courier service for next business day delivery or (iii) the business day on which confirmation of delivery is received, if sent by facsimile.

Section 8.2 Extension; Amendment; Waiver. At any time prior to the Closing Date, the parties may (a) extend the time for performance of any of the obligations or other acts of the other parties or (b) waive or amend any provision of this Agreement if, and only if, such extension, amendment or waiver is in writing and signed, in the case of an amendment, by the Purchasers and the Seller, or in the case of an extension or waiver, by the party against whom the extension or waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 8.3 Time of Essence. Each of the parties hereto hereby agrees that, with regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

Section 8.4 Assignment. No party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto; provided, however, that the Purchasers may assign their rights and obligations to purchase the Shares to any Person to whom they are permitted to assign their rights and obligations under the Governance and Standstill Agreement, but no such assignment shall relieve the Purchasers of their obligations hereunder unless the Seller shall have given its prior written consent thereto.

Section 8.5 Entire Agreement. This Agreement (including the Schedule hereto) contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters.

Section 8.6 Parties in Interest. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

Nothing in this Agreement, express or implied, is intended to confer upon any Person other than the Purchasers or the Seller, or their successors or permitted assigns, any rights or remedies under or by reason of this Agreement.

Section 8.7 Expenses. Except as otherwise expressly provided in this Agreement, whether or not the transactions contemplated by this Agreement are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the party incurring such expenses. For the avoidance of doubt, (a) nothing in the foregoing shall be deemed to effect any rights of KKR under the KKR Management Agreement, and (b) the Purchasers understand and agree that they shall be responsible (which obligation shall survive the Closing) for paying (i) in the event that the transactions contemplated hereby are consummated, actual expenses incurred by the Company and/or the Special Committee of the Board of Directors of the Company in connection with the transactions contemplated hereby (including financial advisors and legal fees but not including Special Committee member compensation) of up to $1,250,000, and (ii) whether or not the transactions contemplated hereby are consummated, all filing fees in connection with any filing under the HSR Act.

Section 8.8 Governing Law; Jurisdiction. This Agreement shall be governed by the laws of the State of Delaware, its rules of conflict of laws notwithstanding. The Seller and each of the Purchasers hereby agrees and consents to be subject to the jurisdiction of the Court of Chancery of the State of Delaware in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby. Each party hereby irrevocably consents to the service of any and all process in any such suit, action or proceeding by the delivery of such process to such party at the address and in the manner provided in Section 8.1.

Section 8.9 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement.

Section 8.10 Headings. The heading references herein and in the table of contents hereto are for convenience purposes only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

Section 8.11 Further Assurances. From time to time after the Closing Date, at the request of the other parties hereto and at the expense of the party so requesting, Seller and the Purchasers shall execute and deliver to such requesting party such documents and take such other action as such requesting party may reasonably request in order to consummate the transactions contemplated hereby.

Section 8.12 Limited Liability of Members of Seller. Notwithstanding any other provision of this Agreement, no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement or any of the transactions contemplated hereby will be had against any current or future director, officer, employee, general or limited partner or member of Seller, or of any of the foregoing (collectively, a “Related Party”), whether

by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly understood and agreed that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any Related Party, as such, for any obligation of Seller under this Agreement or any documents or instruments delivered in connection with this Agreement or any of the transactions contemplated hereby or for any claim based on, in respect of or by reason of such obligations or their creation.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed or caused this Agreement to be executed as of the date first written above.

		VIEWER HOLDINGS LLC

		By:		KKR 1996 FUND L.P., Managing Member
		By:		KKR ASSOCIATES 1996 L.P., General Partner
		By:		KKR 1996 GP LLC, General Partner

		By:		/s/ Michael W. Michelson
				Name: Michael W. Michelson
				Title: Member


		OCM PRINCIPAL OPPORTUNITIES FUND IV, L.P.

		By:		OCM PRINCIPAL OPPORTUNITIES FUND IV GP, L.P., its General Partner
		By:		OCM PRINCIPAL OPPORTUNITIES FUND IV GP, LTD, its General Partner
		By:		OAKTREE CAPITAL MANAGEMENT, LLC, a Director

		By:		/s/ Michael P. Harmon
				Name: Michael P. Harmon
				Title: Michael P. Harmon

		By:		/s/ Andrew Salter
				Name: Andrew Salter
				Title: Vice President

		MTS HEALTH INVESTORS II, L.P.

		By:		MTS HEALTH INVESTORS II GP, LLC, its General Partner
		By:		MTS HEALTH INVESTORS II GP HOLDINGS, LLC, the Class A Member

		By:		/s/ Curtis S. Lane
				Name: Curtis S. Lane
				Title: Senior Managing Director

SCHEDULE I

SCHEDULE OF PURCHASERS

Name of Purchaser	No. of Shares Purchased	Aggregate Purchase Price
MTS	3,200,000	$20,000,000.00
OCM Fund	21,301,505	$133,134,406.25

I-1

Schedule 5.2

REQUIRED CONSENTS

1. Credit Agreement Waiver

5.2-1

Exhibit A

FORM OF ASSIGNMENT OF REGISTRATION RIGHTS

A-1

ASSIGNMENT

This ASSIGNMENT (this “Assignment”), is made this , 2007, by Viewer Holdings LLC, a Delaware limited liability company (“Stockholder”), for the benefit of OCM Principal Opportunities Fund IV, L.P., a California limited partnership (“OCM Fund”), and MTS Health Investors II, L.P., a Delaware limited partnership (together with OCM Fund, the “Purchasers”).

WHEREAS, Stockholder is a party to that certain Registration Rights Agreement, dated as of November 2, 1999, by and among Alliance Imaging, Inc., a Delaware corporation (the “Company”), Stockholder and certain other parties thereto (the “Registration Rights Agreement”);

WHEREAS, Stockholder is party to that certain Stock Purchase Agreement, dated as of March 16, 2007 (the “Stock Purchase Agreement”), by and among Stockholder and the Purchasers, pursuant to which Stockholder has agreed to sell, and the Purchasers have agreed to purchase, shares (the “Shares”) of Common Stock, par value $0.01 per share (the “Common Stock”), of the Company (the “Share Purchase”);

WHEREAS, in connection with the Share Purchase, Stockholder has agreed to assign Stockholder’s registration rights relating to the Shares under the Registration Rights Agreement.

NOW THEREFORE, in consideration of the premises:

1. Stockholder hereby assigns its rights and future obligations for all purposes under the Registration Rights Agreement (a) with respect to the Shares to the Purchasers, including without limitation the registration rights in connection with the ownership of the Shares pursuant to Sections 3 and 4 of the Registration Rights Agreement.

2. For the avoidance of doubt, immediately following the effectiveness hereof:

(a) The Shares shall be deemed to be “Registrable Securities” under the Registration Rights Agreement; and

(b) The Purchasers shall each be deemed to be “Investors” and “Holders” under the Registration Rights Agreement.

3. Notwithstanding anything herein to the contrary, Stockholder shall not be deemed to be assigning any rights it may have under the Registration Rights Agreement with respect to any shares of Common Stock it holds on the date hereof or held at any time prior to the date hereof, other than the Shares, including without limitation any rights under Sections 8 of the Registration Rights Agreement with respect to shares of Common Stock previously sold by Stockholder pursuant to the Registration Rights Agreement.

4. Stockholder covenants and agrees that Stockholder will have no right to exercise any Demand Registration at any time during which either (i) the registration statement on Form S-3, registration number 333-122453, or any other registration statement including Stockholder’s shares, is effective and Stockholder has the ability to sell all of its shares of Common Stock

A-2

thereunder, or (ii) Stockholder has the ability to sell all of its shares of Common Stock pursuant to Rule 144(k) under the Securities Act.

5. Capitalized terms not defined herein but defined under the Registration Rights Agreement shall have the meanings under the Registration Rights Agreement.

6. This Assignment shall become effective upon Closing (as defined under the Stock Purchase Agreement).

[Signature Page Follows]

A-3

	VIEWER HOLDINGS LLC

	By:	KKR 1996 FUND L.P., Managing Member
	By:	KKR ASSOCIATES 1996 L.P., General Partner
	By:	KKR 1996 GP LLC, General Partner

	By:
		Name: Michael W. Michelson
		Title: Member:

AGREED TO AND ACCEPTED:

OCM PRINCIPAL OPPORTUNITIES FUND IV, L.P.

By:	OCM PRINCIPAL OPPORTUNITIES
	FUND IV GP, L.P., its General Partner
By:	OCM PRINCIPAL OPPORTUNITIES
	FUND IV GP, LTD, its General Partner
By:	OAKTREE CAPITAL MANAGEMENT, LLC,
	a Director

By:
	Name:
	Title:

MTS HEALTH INVESTORS II, L.P.

By:	MTS HEALTH INVESTORS II GP,
	LLC, its General Partner
By:	MTS HEALTH INVESTORS II GP
	HOLDINGS, LLC, the Class A Member

By:
	Name:
	Title:

[Signature Page to Assignment]

ACKNOWLEDGED AND ACCEPTED:

ALLIANCE IMAGING, INC.

By:
		Name:
		Title:

A-1

Exhibit B

FORM OF AMENDMENT TO MANAGEMENT AGREEMENT

B-1

Kohlberg Kravis Roberts & Co., L.P.
2800 Sand Hill Road
Menlo Park, CA 94025

, 2007

Alliance Imaging, Inc.
1900 S. State College Blvd., Suite 600
Anaheim, California 92806

Ladies and Gentlemen:

Reference is made to that certain letter agreement, dated as of November 2, 1999 (the “Letter Agreement”), between Alliance Imaging, Inc., a Delaware corporation (the “Company”), and Kohlberg Kravis Roberts & Co., L.P. (“KKR”). Reference is further made to that certain Stock Purchase Agreement, dated as of March 16, 2007 (the “Stock Purchase Agreement”), by and among Viewer Holdings LLC, a Delaware limited liability company and an affiliate of KKR (the “Seller”), OCM Principal Opportunities Fund IV, L.P., a California limited partnership (“OCM Fund”), and MTS Health Investors II, L.P., a Delaware limited partnership (together with OCM Fund, the “Purchasers”), relating to the sale by the Seller to the Purchasers of shares of Common Stock, par value $0.01, of the Company, and to Section 6.2(f) of the Stock Purchase Agreement, pursuant to which it is a condition to the Purchasers’ obligation to purchase such shares that KKR and the Company have entered into this Letter Agreement amendment. Capitalized terms used but not defined herein have the meanings assigned to them in the Letter Agreement.

This Letter Agreement amendment serves to confirm our understanding and agreement as follows:

1. From and after the Closing (as defined in the Stock Purchase Agreement), (a) no payment obligations shall accrue under Section 1 or Section 3 of the Letter Agreement; provided, however, the foregoing shall not be deemed to apply with respect to unpaid fees and expenses accrued prior to Closing in an amount not in excess of $475,000 (the “Unpaid Fees & Expenses”), and nothing in this Letter Agreement amendment shall be deemed to affect the Company’s obligation to pay to KKR the Unpaid Fees and Expenses; and (b) KKR shall have no further performance obligations pursuant to Section 1 of the Letter Agreement.

2. The Company shall not have any indemnification or contribution obligation pursuant to Section 4 of the Letter Agreement with respect to any actions or inactions of any Indemnified Party occurring after the Closing. For the avoidance of doubt, the foregoing shall not be deemed to affect the obligations of the Company pursuant to Section 4 of the Letter Agreement (a) arising prior to the Closing, (b) with respect to any activity contemplated by the Letter Agreement or KKR’s retention pursuant to, and KKR’s affiliates’ performance of the services contemplated by, the Letter Agreement, in each case prior to the Closing, or (c) otherwise with respect to any actions or inactions of any Indemnified Party prior to the Closing.

3. Upon the Closing, Sections 2, 8, 9 and 13 of the Letter Agreement shall terminate.

4. Sections 5, 6, 7, 10, 11 and 12 of the Letter Agreement shall survive the Closing in their entirety.

5. This Letter Agreement amendment shall be effective upon the Closing.

[Signature Page Follows]

		Very truly yours,

		KOHLBERG KRAVIS ROBERTS & CO., L.P.


		By:
				Name:
				Title:

AGREED TO AND ACCEPTED:

ALLIANCE IMAGING, INC.

By:
		Name:
		Title:

B-1

EX-3 4 a07-8927_1ex3.htm EX-3

Exhibit 3

GOVERNANCE AND STANDSTILL AGREEMENT

This GOVERNANCE AND STANDSTILL AGREEMENT (this “Agreement”), dated as of March 16, 2007, is entered into by and among Alliance Imaging, Inc., a Delaware corporation (together with its successors, the “Company”), OCM Principal Opportunities Fund IV, L.P., a California limited partnership (“OCM Fund” and, together with its Affiliates (as defined below), successors and Permitted Assignees (as defined below), “Oaktree”), and MTS Health Investors II, L.P., a Delaware limited partnership (“MTS Health Investors” and, together with its Affiliates, successors and Permitted Assignees, “MTS” and, together with Oaktree, the “Oaktree Parties”).

W I T N E S S E T H

WHEREAS, affiliates of Kohlberg Kravis Roberts & Co. (“KKR”) beneficially own as of the date hereof 25,944,570 shares of the Common Stock (as defined below), representing approximately 52% of the Adjusted Outstanding Common Stock (as defined below);

WHEREAS, KKR, OCM Fund and MTS Health Investors are entering into that certain Stock Purchase Agreement dated as of the date hereof (the “Stock Purchase Agreement”) pursuant to which KKR will agree to sell, and OCM Fund and MTS Health Investors will agree to buy, 24,501,505 shares of Common Stock, representing approximately 49% of the Adjusted Outstanding Common Stock of the Company; and

WHEREAS, in connection with the execution of the Stock Purchase Agreement, KKR and a Special Committee of the Board of Directors comprised of independent and disinterested directors unaffiliated with KKR (the “Special Committee”) has requested that the Oaktree Parties enter into this Governance and Standstill Agreement.

NOW, THEREFORE, in consideration of the mutual agreements and understandings set forth herein, the parties hereto hereby agree as follows:

ARTICLE I.

CERTAIN DEFINITIONS

Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

“Adjusted Outstanding Common Stock” shall mean, at any time, the total number of shares of outstanding Common Stock at such time.

“Affiliate” shall mean, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. As used in this definition, “control” (including its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

“Agreement” shall mean this Agreement as in effect on the date hereof and as hereafter from time to time amended, modified or supplemented in accordance with the terms hereof.

“Beneficial Ownership” or “Beneficially Own” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

“Board of Directors” shall mean the Board of Directors of the Company as from time to time hereafter constituted.

“Business Day” shall mean any day, other than a Saturday, Sunday or a day on which commercial banks in New York, New York are authorized or obligated by law or executive order to close.

“Common Stock” shall mean the common stock, par value $0.01 per share, of the Company.

“Company” shall have the meaning set forth in the preamble hereto.

“Designee” shall have the meaning set forth in Section 2.1(b).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“KKR Management Agreement” shall mean that certain letter agreement, dated as of November 2, 1999, by and between the Company and Kohlberg Kravis Roberts & Co., L.P. relating to management, consulting and financial services to the Company.

“Person” shall mean an individual, corporation, unincorporated association, partnership, trust, joint stock company, joint venture, business trust or unincorporated organization, limited liability company, any governmental entity or any other entity of whatever nature.

“Representatives” shall mean, with respect to any Person, such Person’s directors, officers, employees, agents and other representatives acting in such capacity.

“SEC” shall mean the United States Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Standstill Limit” shall mean 49.9% of the Adjusted Outstanding Common Stock.

“Standstill Period” shall mean the period beginning on the Closing Date (as defined in the Stock Purchase Agreement) and ending on the third anniversary thereof.

“Unaffiliated Director” shall mean a member of the Board of Directors who is neither (a) an affiliate of any of the Oaktree Parties, nor (b) an employee of the Company.

ARTICLE II.

CORPORATE GOVERNANCE

Section 2.1 Board of Directors.

(a) The parties agree that, during the Standstill Period, the number of directors of the Board of Directors shall be fixed at seven (7) members, which number shall not be modified except pursuant to an affirmative vote of 66-2/3% of the directors then in office at the time of such modification or a greater number if required in the Company’s Certificate of Incorporation and/or Bylaws.

(b) For so long as the Oaktree Parties Beneficially Own an aggregate of at least 35% of the Adjusted Outstanding Common Stock, the Oaktree Parties shall have the right to nominate three (3) members to the Board of Directors (each, a “Designee,” and collectively, the “Designees”). Each Designee shall be subject to the reasonable prior approval of a majority of both the Unaffiliated Directors and the Nominating/Corporate Governance Committee and shall continue to serve as a director until the sooner of such director’s death, resignation, or the next election of directors at which his/her class of directors shall be elected. Each Designee shall be nominated to serve in a different class of the Board of Directors. Class I of the Board of Directors shall have three (3) members, consisting of one (1) Designee, one (1) Unaffiliated Director, and the Company’s Chief Executive Officer. Each of Classes II and III shall have two (2) members, consisting of one (1) Designee and one (1) Unaffiliated Director. Subject to the completion of commercially reasonable and timely due diligence by the Unaffiliated Directors which has been commenced prior to the date hereof, Stephen Kaplan, Michael P. Harmon and Curtis S. Lane shall be the initial Designees for election to the Board of Directors. In the event that the Oaktree Parties Beneficially Own less than 35% but at least 25% of the Adjusted Outstanding Common Stock, the Oaktree Parties shall have the right to nominate two (2) Designees, a Class II Director and a Class III Director. In that case, the number of Designees on committees of the Board of Directors as set forth below shall be reduced by one. In the event that the Oaktree Parties Beneficially Own less than 25% but at least 15% of the Adjusted Outstanding Common Stock, the Oaktree Parties shall have the right to nominate one (1) Designee, a Class III Director. In that case, the Designee shall not be entitled to sit on any of the committees of the Board of Directors set forth below. In the event that the Oaktree Parties Beneficially Own less than 15% of the Adjusted Outstanding Common Stock, the Oaktree Parties shall have no contractual right to nominate any Designees (but nothing contained herein shall adversely affect their rights to make nominations as a stockholder at such time).

(c) Subject to applicable law, in the event any Designee on the Board of Directors shall cease to serve as a director for any reason (other than the failure of the stockholders of the Company to elect such person as director), the vacancy resulting therefrom shall be filled by another Designee, subject to reasonable prior approval of the Unaffiliated Directors and the Nominating/Corporate Governance Committee.

Section 2.2 Board Committees.

(a) Executive Committee. The parties agree the Executive Committee of the Board of Directors shall be disbanded effective as of the date of the consummation of the transactions contemplated by the Stock Purchase Agreement, and it will not be reconstituted without the prior consent of a majority of the Unaffiliated Directors.

(b) Audit Committee. The parties agree that during the Standstill Period and for so long as otherwise required by applicable law and the rules and regulations of the New York Stock Exchange and any successor organization on which the Company’s Common Stock is listed, the Audit Committee of the Board of Directors shall be comprised exclusively of Unaffiliated Directors.

(c) Compensation Committee. Subject to applicable law and compliance with the rules and regulations of the New York Stock Exchange and any successor organization on which the Company’s Common Stock is listed, the parties agree that during the Standstill Period the Compensation Committee of the Board of Directors shall be comprised of four (4) members, consisting of two (2) Designees and two (2) Unaffiliated Directors. Subject to applicable law and compliance with the rules and regulations of the New York Stock Exchange and any successor organization on which the Company’s Common Stock is listed, the Chairperson of the Compensation Committee shall be a Designee. The parties and their Designees agree to use commercially reasonable efforts to prepare for approval by the Board of Directors a new Compensation Committee charter which will be compliant with applicable law and with the rules and regulations of the New York Stock Exchange and any successor organization on which the Company’s Common Stock is listed, such charter to be effective as of the closing of the transactions contemplated by the Stock Purchase Agreement.

(d) Nominating/Corporate Governance Committee. Subject to applicable law and compliance with the rules and regulations of the New York Stock Exchange and any successor organization on which the Company’s Common Stock is listed, the parties agree that during the Standstill Period the Nominating/Corporate Governance Committee of the Board of Directors shall be comprised of four (4) members, consisting of two (2) Designees and two (2) Unaffiliated Directors. During the Standstill Period, the Chairperson of the Nominating/Corporate Governance Committee shall be an Unaffiliated Director. The parties and their Designees agree to use commercially reasonable efforts to prepare for approval by the Board of Directors a new Nominating/Corporate Governance Committee charter which will, among other things, (i) comply with applicable law; (ii) comply with the rules and regulations of the New York Stock Exchange and any successor organization on which the Company’s Common Stock is listed; and (iii) provide that the Board of Directors shall not nominate any person to serve as a director of the Company unless such person has been previously approved for nomination by the Nominating/Corporate Governance Committee, such charter to be effective as of the closing of the transactions contemplated by the Stock Purchase Agreement.

(e) Finance Committee. The parties agree a new Finance Committee of the Board of Directors shall be created upon consummation of the transactions contemplated by the Stock Purchase Agreement. During the Standstill Period, the Finance Committee of the Board of Directors shall be comprised of three (3) members, consisting of the Company’s Chief Executive Officer, one (1) Designee, and one (1) Unaffiliated Director and the Chairperson of the Finance Committee shall be the Company’s Chief Executive Officer. The parties and their Designees

agree to use commercially reasonable efforts to prepare a new Finance Committee charter for approval by the Board of Directors, such charter to be effective as of the closing of the transactions contemplated by the Stock Purchase Agreement.

Section 2.3 No Management Fees to be Paid to the Oaktree Parties. The parties agree that, during the Standstill Period and in the absence of approval thereof in accordance with Section 203 of the Delaware General Corporation Law, the Company shall not pay to any of the Oaktree Parties any management or similar fees; provided, however, nothing in this Section 2.3 shall prohibit the Company from indemnifying a Designee as a director of the Company or from reimbursing a Designee for expenses incurred as a director, in each case on terms and to the same extent the Company indemnifies or reimburses expenses of its other directors pursuant to its organizational documents, indemnity agreements, directors’ and officers’ liability insurance policies in effect from time to time, and applicable law.

Section 2.4 Management Rights.

The parties agree that during the Standstill Period.

(a) Each of the Oaktree Parties shall be permitted to consult with management of the Company (the “Management”) on significant business issues, including Management’s proposed annual operating plans, and Management will make itself available to meet with each of the Oaktree Parties regularly during each year at mutually agreeable times for such consultation and to review progress in achieving said plans.

(b) In the event of any material development to or affecting the Company’s business, the Company shall provide the Oaktree Parties with the opportunity, on reasonable prior written notice, to consult with the Company’s Management of its views with respect thereto.

(c) The Oaktree Parties may examine the books and records of the Company and visit and inspect its facilities and may reasonably request information at reasonable times and intervals concerning the general status of the Company’s financial conditions and operations.

(d) On reasonable prior written notice, the Oaktree Parties may discuss the business operations, properties and financial and other conditions of the Company with the Company’s Management and with the Company’s independent accountants.

(e) The Oaktree Parties shall be entitled to request that the Company provide, when available, copies of (i) all financial statements, forecasts and projections provided to or approved by the Board of Directors; (ii) all consolidated balance sheets and consolidated statements of income and cash flows; (iii) all notices, minutes, proxy materials, consents and correspondence and other material that it provides to its directors and stockholders; (iv) any letter issued to the Company by its accountants with respect to the Company’s internal controls; (v) any documents filed by the Company with the United States Securities and Exchange Commission; and (vi) such other business and financial data as any Oaktree Party reasonably may request in writing from time to time.

(f) No Oaktree Party will exercise any of the foregoing rights set forth in this Section 2.4 at any time that a representative of such Oaktree Party is a member of the Board of Directors. In addition, the foregoing rights set forth in this Section 2.4 shall not be exercisable by any Oaktree Party unless (a) such party Beneficially Owns at least 5% of the Adjusted Outstanding Common Stock (or 2% in the case of MTS Health Investors); and (b) prior to the exercise of the rights, (i) such Oaktree Party enters into a confidentiality agreement reasonably acceptable to the Company which shall govern the manner in which the Oaktree Party will hold and use the information; and (ii) such Oaktree Party agrees to abide by all applicable laws and regulations pertaining to the use of such information, including without limitation, Regulation FD.

ARTICLE III.

STANDSTILL AGREEMENT

Section 3.1 Standstill Agreement.

During the Standstill Period, none of the Oaktree Parties will, directly or indirectly, nor will it authorize or direct any of its Representatives to (and will take appropriate action against such Representatives to discourage), in each case without the prior written consent of a majority of the Unaffiliated Directors in their sole and absolute discretion:

(i) acquire, propose to be acquired, or cause to be acquired, Beneficial Ownership of additional securities of the Company that would cause the Oaktree Parties’ aggregate Beneficial Ownership of Common Stock to exceed the Standstill Limit;

(ii) publicly announce or disclose any intention, plan or arrangement inconsistent with the foregoing; or

(iii) take any actions which would be inconsistent with the purpose and intent of this Section 3.1.

ARTICLE IV.

PAYMENT OF CERTAIN COMPANY EXPENSES

Section 4.1. Payment of Certain Company Expenses.

At the closing of the transactions contemplated by the Stock Purchase Agreement and upon presentment to the Oaktree Parties of reasonable documentation thereof, the Oaktree Parties shall reimburse the Company an amount not to exceed $1,250,000 for actual expenses (including financial advisory and legal fees but not including Special Committee member compensation) incurred by the Company or the Special Committee in connection with the activities of the Special Committee of the Board of Directors formed in January 2007.

ARTICLE V.

MISCELLANEOUS

Section 5.1 Notices.

All notices or other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the party for whom it is intended, if delivered by registered or certified mail, return receipt requested, or by a national courier service, or if sent by facsimile (with receipt of confirmation of delivery), to the person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person:

(a)	If to the Oaktree Parties, to:

	OCM Principal Opportunities Fund IV, L.P.

	c/o Oaktree Capital Management, LLC
	333 South Grand Ave., 28th Floor
	Los Angeles, CA 90071
	Attention: Michael P. Harmon
	Fax: (213) 830-6393

	MTS Health Investors II, L.P.

	c/o MTS Health Partners
	623 Fifth Avenue, 15th Floor
	New York, NY 10022
	Attention: Curtis S. Lane
	Fax: (212) 887-2111

	with a copy to:

	Skadden, Arps, Slate, Meagher & Flom LLP
	300 S. Grand Avenue, Suite 3400
	Los Angeles, CA 90071
	Attention: Jeffrey H. Cohen and Rick C. Madden
	Fax: (213) 687-5600

(b)	If to the Company, to:

	Alliance Imaging, Inc.
	1900 S. State College Blvd., Suite 600
	Anaheim, CA 92806
	Attention: Paul S. Viviano, CEO
	Fax: (714) 688-3397

	With a copy to:

	Alliance Imaging, Inc.
	1900 S. State College Blvd., Suite 600
	Anaheim, CA 92806
	Attention: Eli Glovinsky, General Counsel
	Fax: (714) 688-3397

	Gibson, Dunn & Crutcher LLP
	2029 Century Park East, Suite 4000
	Los Angeles, CA 90067
	Attention: Jonathan K. Layne
	Fax: (310) 552-7053

Section 5.2 Entire Agreement; Amendment. This Agreement contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters. No provision of this Agreement may be amended or modified in whole or in part at any time unless agreed to in writing in advance by the parties and a majority of the Unaffiliated Directors. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as a waiver thereof nor shall any single or partial exercise by any party of any right preclude any other or future exercise thereof or the exercise of any other right.

Section 5.3 Effectiveness. This Agreement shall be effective as of the closing of the transactions contemplated by the Stock Purchase Agreement. In the event that the Stock Purchase Agreement is terminated in accordance with its terms prior to the closing of the transactions contemplated by the Stock Purchase Agreement, this Agreement shall be of no force or effect.

Section 5.4 Severability. In the event that any one or more of the provisions contained in this Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.

Section 5.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same document.

Section 5.6 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed and construed in accordance with the internal laws (without reference to choice or conflict of laws) of the State of Delaware, and each party hereby submits to the exclusive jurisdiction of the Delaware Court of Chancery of the State of Delaware. Each party hereby waives all right to a trial by jury in any action, suit or proceeding brought to enforce or defend any rights or remedies under this Agreement. Each party irrevocably consents to the

service of any and all process in any such action, suit or proceeding by the delivery of such process to such party at the address and in the manner provided in Section 5.1.

Section 5.7 Specific Performance. Each party agrees that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof. Accordingly, each of the parties hereby consents to the issuance of injunctive relief without bond by the Delaware Court of Chancery to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in addition to any other remedy to which they are entitled at law or in equity.

Section 5.8 Successors and Assigns; Third Party Beneficiaries. None of the Oaktree Parties may transfer or assign any of its rights and obligations under this Agreement without the prior written consent of a majority of the Unaffiliated Directors; provided, however, that each of the Oaktree Parties may assign all or a portion of its rights hereunder to an Affiliate or one or more of its limited partners (each a “Permitted Assignee” and collectively “Permitted Assignees”) which delivers an executed counterpart to this Agreement as a condition precedent to the effectiveness of such assignment. This Agreement shall bind and inure to the benefit of the Company’s successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any Person other than the Oaktree Parties, the Permitted Assignees, and the Company, or their successors, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. Notwithstanding anything to the contrary contained herein, no purchaser of Common Stock from any of the Oaktree Parties (other than another of the Oaktree Parties or an Affiliate of the Oaktree Parties or other Permitted Assignee) shall be deemed to be a successor or permitted assign by reason merely of such purchase.

Section 5.9 Headings and Captions. The section headings and captions contained in this Agreement are for reference purposes only, are not part of this Agreement and shall not affect the meaning or interpretation of this Agreement.

Section 5.10 No Approval of Stock Purchase Agreement; No DGCL Section 203 Waiver. For the avoidance of doubt, neither the existence of this Agreement nor any provision herein shall be construed as either (a) an approval or disapproval of the Stock Purchase Agreement or the sale of shares thereunder; (b) an approval or disapproval of any transaction by which any of the Oaktree Parties may be deemed to be an “interested stockholder” for purposes of Delaware General Corporation Law Section 203; or (c) a waiver by the Company of any of the provisions of Delaware General Corporation Law Section 203. Each of the Oaktree Parties agrees to never take any position or assert any claim which is contrary to the foregoing.

[signature page follows]

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the date first above written.

	OCM PRINCIPAL OPPORTUNITIES FUND IV, L.P.

	By:	OCM PRINCIPAL OPPORTUNITIES FUND IV
		GP, L.P., its General Partner
	By:	OCM PRINCIPAL OPPORTUNITIES FUND IV
		GP, LTD, its General Partner
	By:	OAKTREE CAPITAL MANAGEMENT, LLC, a
		Director

	By:	/s/ Michael P. Harmon
	Name: Michael P. Harmon
	Title: Managing Director

	By:	/s/ Andrew Salter
	Name: Andrew Salter
	Title: Vice President

	MTS HEALTH INVESTORS II, L.P.

	By:	MTS HEALTH INVESTORS II GP, LLC,
		its General Partner
	By:	MTS HEALTH INVESTORS II GP HOLDINGS,
		LLC, the Class A Member

	By:	/s/ Curtis S. Lane
	Name: Curtis S. Lane
	Title: Senior Managing Director

	ALLIANCE IMAGING, INC.

	By:	/s/ Paul S. Viviano
	Name: Paul S. Viviano
	Title: Chief Executive Officer

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Under the Securities Exchange Act of 1934

Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

Section 2.1 Board of Directors.

Section 2.2 Board Committees.

Section 3.1 Standstill Agreement.

Section 5.1 Notices.

Section 5.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same document.

service of any and all process in any such action, suit or proceeding by the delivery of such process to such party at the address and in the manner provided in Section 5.1.

Section 5.9 Headings and Captions. The section headings and captions contained in this Agreement are for reference purposes only, are not part of this Agreement and shall not affect the meaning or interpretation of this Agreement.

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Under the Securities Exchange Act of 1934